Fishy Economics

How can we deal with the problem that unrestricted access to fish leads to over-fishing? This is almost a textbook exercise in Coase economics.

One solution is fish farming, in which a business owns the fish that it breeds in a particular area. In The Skeptical Environmentalist, Bjorn Lomborg argues that fish farming is increasing the supply of fish, even as the supply in public oceans declines.

The first step in establishing a quota system is to determine the total allowable catch. The next crucial step is to allocate shares of that total limit to fishermen in individual quotas that are theirs and theirs alone (read: well-defined property rights).

Comments and Sharing

As my students say, fish have this pesky tendency to move! So a well-defined geographical property right still leaves some noise/risk in your possible catch.

I like having them think about things like whether or not the development of technologies like GPS that make it easier to define geographic property rights will solve all such "conflicting use of common resource" problems.

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